Low- income families, who received the greatest percent gains of all families in the US, have higher cash balances now than before the pandemic, according to a new report from JP Morgan Chase. In contrast, the report found, families with higher incomes and no dependent children maintained cash balance increases.
The Covid 18 pandemic resulted in an unprecedented recession that impacted low-income families ‘financial position’. Based on recent JP Morgan Chase institute research, our household finances pulse leverages de-identified administrative banking data to analyze changes in cash balances during the covid 19 pandemic and ongoing recovery.
This release examines the path of liquid balances as of the end of September 2021, giving us a first look at liquid asset trends after the nationwide expiration of expanded unemployment insurance benefits on September 5, 2021, and the first three months of the advanced child tax credit payments. cash balance trends are compared across the income distribution and also between low-income families and without dependent children.
The typical low-income family still had seventy percent more cash on hand than two years prior. Balances among high-income families were roughly forty percent elevated relative to two years prior. A cash buffer of 1000 dollars is a substantial increase but by no means a thick security blanket for low-income families.
Throughout this time, expanded unemployment insurance delivered payments to jobless workers, including gig workers and self-employed workers, with a weekly supplement o9f 600 dollars between march and July 2020 and 300 dollars during October 2020 and between January and September 2021.
Twenty- five states had ended expanded UI benefits by the end of July 2021, with the remaining states ending benefits on s4ep 5,2021. At this time, roughly two-thirds of benefit recipients lost benefits entirely, while one-third lost just the weekly 300 dollar supplement.
A reasonable question is whether a 70 percent increase or 1000 dollars represents a large cash buffer for low-income families.in other words, a balance of 1000 dollars is going to be closer to the full picture of financial assets that many low-income Black and Latinx families have to draw upon, while low-income black and Latinx families have to draw upon, while low-income white families typically have an additional cash buffer in other liquid assets.
This suggests that black and Latinx families could face financial urgency sooner .indeed balance trends after the first round of stimulus suggest that black and Latinx families, and the black and Latinx women in particular depleted their boosts from the first round of EIP more quickly.